State, region make technology grade

Friday

Feb 27, 2009 at 2:00 AM

A new report finds the state held its own or excelled compared to other states with innovation-driven economies — but experts caution that continued investment in related areas is key for long-term economic health.

SARAH SHEMKUS

A new report finds Massachusetts held its own or excelled when compared with other states with innovation-driven economies — but experts caution that continued investment in related areas is key for the state's long-term economic health.

And on the Cape, where technology has historically taken a back seat to other industries such as tourism and fishing, technology-driven businesses are gradually becoming a more visible and integral part of the economy, local experts say.

"We have a proliferation of small, innovative companies," said Peter Karlson, president of the Cape Cod Technology Council.

The Index of the Massachusetts Innovation Economy, a report released today by the Massachusetts Technology Collaborative's John Adams Innovation Institute, compares Massachusetts' performance on 20 economic indicators in 2007 and early 2008 with that of nine other states with innovation-driven economies: California, Connecticut, Illinois, New Jersey, New York, North Carolina, Minnesota, Pennsylvania and Virginia.

The conclusion?

Massachusetts held its own or excelled in most areas — research and development funding, initial public offerings, educational attainment — but needs to pay attention to a few areas of concern, including spending on public education and the affordability of housing.

"These are indicators that you can't just change overnight," said Patricia Flynn, professor of economics and management at Bentley University and chairwoman of the index advisory committee. "They really require long-term investment on the part of the state."

The state ranked first in the amount of federal Small Business Innovation Research awards per capita and topped the list of patents issued per capita. In Massachusetts, 43 percent of residents age 25 or older had earned a bachelor's degree; the average of the comparison states was 26 percent.

The picture, however, is further complicated by the sudden worsening of the economy in the fall of 2008, right around the time the index was being completed. Some effects of economic decline were captured in the index, while other, more recent impacts, had not yet made their way into the numbers.

"Prior to September and October, these metrics that we use really suggest that the innovation economy was doing pretty well," Flynn said. "Now we come to the current crisis."

Based on the data in the index, there were already concerns about the state's relatively low level of spending on public higher education, she said.

Now, as the recession continues, many people are returning to school and more families are turning to public colleges and universities as an alternative to pricier private schools.

It is essential, Flynn said, that an influx of new students not compromise the education they receive.

"That's a real critical component that we don't want to see fall through the cracks during a recession," she said.

On the Cape, the technology sector is well positioned for growth, experts said.

"It's in transition right now," said Robert Curtis, CEO of the Regional Technology Development Corp. of Cape Cod, an organization that helps scientists turn their research into viable commercial enterprises. "I think its on the cusp of moving forward on a number of different fronts."

The Woods Hole Oceanographic Institution is starting to get behind the idea of commercializing technology, he said, and he has seen growing interest in alternative energy technologies.

Among the obstacles to the growth of technology business on the Cape is the limited availability of broadband Internet access, said Teresa Martin, former CEO of the Cape Cod Technology Council and vice president of OpenCape Corp., a project that is trying to improve broadband in the region.

"Infrastructure does continue to be a limiting factor," she said.

Looking ahead, collaborations between researchers and businesspeople will be necessary for long-term growth at the regional and state levels, said Susan Avery, president of WHOI and a contributor to the index report.

"One of the things that we're certainly looking at is more collaborative efforts," she said. "When you can really tie innovation to the economy, it works better for everyone."

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